Five Books

If you don’t read it already, the Five Books series is well worth your while. Its premise is simple and profound. In new interviews published every Friday, various experts recommend the five best books on their areas of expertise. Some good examples are linked below.

• Jason Zweig on Personal Finance
• Burton Malkiel on Investing
• John Gapper on Financial Speculation
• John Kay on Economics in the Real World
• Tim Radford on Science Writing
• Vanora Bennett on Historical Fiction
• Rick Telander on American Football (and its Dark Side)

Rather than simply stealing this idea and applying it to the investing world, I asked some influential people in the world of finance about the five books that most influenced them and didn’t limit their choices to a particular field or category. I hoped to get some broadening of our collective outlook.

My five books of this sort follow (in no particular order).

1. The Black Swan, by Nassim Taleb
2. Thinking Fast and Slow, by Daniel Kahneman
3. Ubiquity, by Mark Buchanan
4. Superforecasting, by Philip Tetlock
5. Against the Gods, by Peter Bernstein

And since it’s my blog, I can add a novel because I think literature is so valuable and important. My choice is Lila, by Pulitzer Prize winner Marilynne Robinson, who I think is our greatest living writer. In fact, read the trilogy (which also includes Gilead and Home) and thank me later. And, since his back-story is similar to my own (in his case at Salomon; in my case at Merrill), I love Michael Lewis’s Liar’s Poker.

Here are the replies I got. If I missed you, please provide your five in the comments.

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My Top Ten Non-Investing Books for Investors

Last week, other bloggers and I provided favorite reads for Tadas Viskanta and his terrific site, Abnormal Returns. There are a lot of good and helpful suggestions offered there. But I am seldom asked about books in a broader context — books that changed my overall thinking and thus necessarily changed how I view investing and the markets. The ten books shown in the gallery below did just that. They were (and are) particularly illuminating. I highly recommend them.

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Letters to a Young Analyst

Tom Brakke has an excellent new ebook out entitled Letters to a Young Analyst based upon his series of that name at his terrific blog. You can buy it here. There are also contributions from Barry Ritholtz, Aswath Damodran, David Merkel, Jason Voss and others, including me. I heartily recommend it.

Finding Our Way

Long before GPS, people traveled vast distances using only their highly developed observation skills, the clues they could find in their surroundings, and some simple instruments. In his wonderful book, The Lost Art of Finding Our Way, Harvard physicist John Huth examines the various arts of navigation and wonders what we lose when modern technology usurps our innate capacity to find our own way. Huth weaves together astronomy, meteorology, oceanography, and ethnography to put us in the shoes, ships, and sleds of those who have gone before us and figured out how to get from point A to point B without GPS, smart phone, or even a map. Huth discusses some of the ideas in his book below.

Luck Be a Lady Tonight

The self-serving bias is our tendency to see the good stuff that happens as our doing (“we had a great week of practice, worked really hard and executed on Sunday”) while the bad stuff is rarely our fault (“It just wasn’t our night” or “we simply couldn’t catch a break” or “we would have won if the refereeing hadn’t been so awful”).  Thus desirable results are typically due to our skill and hard work — not luck — while lousy results are outside of our control and frequently the offspring of being unlucky.

Two fine recent books undermine this outlook by (rightly) attributing a surprising amount of what happens to us — both good and bad — to luck.

My Bookshelf

As I noted previously, I resist “best of” lists. That’s because I have my own (better!) tastes and because I have my own needs, outlooks and preferences.  I also cannot claim to have read or seen anything like everything that might be relevant to the topic.  So, as I did earlier with websites I use, instead of claiming that these are the best books of the year, these are books I really appreciated this year.  I read them (in some cases I reread them) and/or referred to them enough that I thought they deserved special mention.  I decided to limit myself to those that would fit on one shelf of one of my office bookcases.  They are pictured below.

Most of them relate to my work and the focus of Above the Market.  But, as you can see, I slipped a few others in for fun.  Most of the titles are new ones, but some are not — either because I referred back to them meaningfully this year or simply didn’t get them read until this year.  The books are listed below (from top down and from left to right in the picture).

• Wait
• Bring Up the Bodies
• The Unthinkable
• Faster
• The Price of Politics
• Uncertainty
• Behavioural Investing
• The 7 Most Important Equations for Your Retirement
• The Signal and the Noise
• Exclusion & Embrace
• Surprised by Hope
• Thinking Fast and Slow
• Abnormal Returns
• Value Investing
• The Success Equation
• Baseball Between the Numbers
• Expert Political Judgment
• Fault Lines
• The Most Important Thing
• The Swerve
• Backstage Wall Street
• Models Behaving Badly
• The Last Great Game
• Adapt
• How Will You Measure Your Life?
• It’s Even Worse Than It Looks
• Expected Returns
• What Works on Wall Street